Paul Cipamba wa Cipamba, 2862929

Eco 824 Assignment 4: working title

A critical assessment of regional trade integration and the prospects of

creating an economic and monetary union by 2018 in Southern Africa

The ultimate goal of regional integration is to create a common economic space

among the participating countries. Monetary and economic integration may evolve
from trade links, as well as, historical and cultural ties. The process entails the
harmonization of macroeconomic policies, legal frameworks and institutional
architectures, towards nominal and real convergence. Other objectives of economic
and monetary union include the enlargement and diversification of market size, the
promotion of intra-regional trade and the strengthening of member countries’
bargaining power in the global economy.

It is generally argued that, regional trade arrangements (RTA) may provide economic
gains (ranging from static to dynamic gains) to its member countries. Empirical
evidence shows that some countries such as those within the European Union (EU)
and the Association of South East Asian Nations (ASEAN) have indeed reaped
sizable benefits from regionalism. In Africa and within the SADC region in particular,
the windfalls from regional trade integration failed to materialize at least for the
moment.

The current SADC economic programme aims to combine market integration with
policy coordination and sectoral cooperation in a broad development project. The
ultimate objective of SADC is to enhance economic development of its members by
expanding the markets, inter alia. Given the poor performance of RTAs in
developing countries, I intend to investigate on the one hand, the performance of
regional trade integration in SADC; and on the hand, the feasibility of the project of
creating a regional monetary union in 2018 by adopting the linear model of
integration.

The approach I would like to use is descriptive statistics and comparative analysis
methods. The latter are intended to investigate what the SADC region can learn from
other integrated regions and in particular ASEAN in order to improve its intra-
regional trade, thus its economic development. An empirical study is also my
intention; the literature is abounded with gravity models. But an autoregressive
model could also help evaluate the convergence to or feasibility of a monetary union.
The study will be limited to the experiences of integration in the European Union, the
ASEAN and probably COMESA.

Objectives of the study

- To investigate why RTAs among developing countries did not lead to tangible
successful results; whereas they had proven, to a greater extent, successful in
other parts f the world (for example EU and ASEAN)
- To assess the performance of integration in the SADC region,
- To identify the prospects for increasing intra-regional trade in the SADC region,
 - To evaluate the possibility of achieving an economic and monetary union in
Southern Africa
- To provide some recommendations regarding the guidelines SADC should
follow to attain an economic and monetary union in the long run
Research questions

- Are there any gains (static and dynamic) from regional integration and through
which mechanisms do these gains materialize?
- What is the rationale behind the formation of regional integration?
- What are the costs and benefits of monetary integration in Southern Africa?
- Can the linear model of integration lead to the formation an economic and
monetary union in SADC

NB: references have been purposely omitted

The above is not yet fully what I am likely to do… I